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Author:Dudley Price; staff writer
Edition: FinalSection: Business
RALEIGH -- One of downtown's largest developers is buying the historic Alexander Building on Fayetteville Street Mall.
Greg Hatem of Empire Properties has contracted to buy the distinctive sevenstory building, one of the oldest downtown, from First Union bank. He declined to divulge the purchase price, but the building, across the mall from First Union along Hargett Street, has a tax value of $2.6 million.
"We think it's underutilized and has a lot more potential than its current use," Hatem said.
The 35,000squarefoot office building is 20 percent vacant. Hatem said empty space on the ground floor could be filled with office or retail tenants.
Hatem said he didn't have any prospective tenants signed, but dropping office vacancy rates and rising rental rates in the oncemoribund downtown show that demand for space in the area is increasing. Office buildings have become particularly hot properties in recent months.
In September, Cambridge, Mass.based Modern Continental Enterprises paid $8.15 million for the 15story 333 Corporate Plaza building on the 300 block of the mall. In October, the 17story One Hannover Square, in the 400 block, was sold to an Atlantabased realestate fund for about $45 million.
And last week, the city council rejected a proposal from Empire Properties and Raleighbased Centre Group and sold the former Hudson Belk department store building to Modern Continental for $2 million.
Empire wanted to convert the fourstory, 181,000squarefoot building, which is adjacent to 333 Corporate Plaza, into hightech offices.
But the council favored Modern's proposal to turn the old store into offices with a 12,600squarefoot Italian restaurant on the ground floor.
Michael Williams, vice president of Karnes Research, which tracks office vacancies in the Triangle, said demand for downtown office space is increasing. In fall 1998, the office vacancy rate downtown was 13.4 percent. By the fall of 2000, the rate was only 5.4 percent.
During the same time, the average rent climbed nearly $1.50 per square foot to $17.45 per square foot.
"The vacancy rate has come down fairly steadily and slowly because of mostly smalltenant activity and little or no construction activity over the past year," Williams said, referring to many small technology companies that have moved downtown.
Hatem said he was attracted to the Alexander Building by the Greek Revival Ionic columns on its exterior and and the solid brass hand rails on the sidewalk beside the building. Hatem said he was negotiating to purchase the Alexander Building at the same time he was trying to buy the old Belk store.
"I think it's a cool building," he said.
The building was constructed in 1907 as a Masonic Temple and was the first structure in the state built from steel and reinforced concrete. The top floor was used as a ballroom.
In later years, the building housed Land's Jewelers, which led to it also being called the Land Building.
Another longtime tenant was Brantley's Drug Store, which was known for its homemade ice cream and was operated by the father of RaleighDurham International Airport's director, John Brantley. After more than three decades, the drugstore moved to another location in 1947 and went out of business in 1988.
Current tenants include law firms Cheshire Parker Schneider Wells & Bryan, Hughes & Turner and The Edmisten & Webb Law Firm as well as Vital Source Technologies.
The purchase will be the latest for Empire Properties, which is rapidly becoming one of downtown's largest landlords.
In 1996, the firm bought an old CocaCola warehouse on West Street and leased it to Jillian's nightclub. Since then, Empire has bought a 40,000squarefoot building on the 300 block of Martin Street, which has such tenants as iXL, an Internet services company, and Barefoot Press.
Empire also has a 24,000squarefoot warehouse on Glenwood South, a 3,000squarefoot warehouse on Bloodworth Street and a 10,000squarefoot building opposite City Market on Blount Street. Only the Blount Street building, which is being renovated, is vacant.
"Everything we do is buy unique properties," Hatem said. "That's what attracted us to [the Alexander] building."
Copyright 2001 by The News & Observer Pub. Co.
